We’re continuing along in our section-by-section analysis of the Burr-Hatch-Upton Proposal to replace the Affordable Care Act (ACA), and today’s topic is reforming the medical malpractice system. The goal, as is made evident by using the phrase 4 times in the course of 3 paragraphs, is the elimination of “junk lawsuits.” The basic argument is that physicians practice “defensive medicine” to protect themselves from frivolous lawsuits, and that this practice of defensive medicine results in overuse of healthcare, which is costly and perhaps even harmful. In fact, the proposal cites a report from the Pacific Research Institute, which claims that “America wastes $589 billion on excessive tort litigation” annually. Three things about that. First, that figure is not specific to healthcare related tort litigation, but encompasses all tort litigation nationally. Thus, the citation of that figure is a tricky way to overstate the size of the problem. Second, the Pacific Research Institute is a highly conservative think tank that believes that “public policy is too important to be left just to the experts.” That makes it a little bit ironic when their figures are being cited as an expert source.Third, there are significant issues with the way in which the number itself was calculated, as this working paper from faculty at Penn, Minnesota, and Duke outlines.
The proposed remedy is to place “caps on non-economic damages and limitations on attorney’s fees.” The idea is that this will ensure that in actual cases of medical malpractice, patients will be able to sue to recover damages, but that the amount of awards will be reduced significantly, removing an incentive for physicians “to order unnecessary tests.” Here’s the problem: This type of tort reform has been tried elsewhere and it hasn’t really worked. For example, I’ve written about the limited impact of tort reform in Texas. I’ve also written about studies that show that malpractice reform could reduce healthcare spending by as little as 1% or as much as 10%, the tremendous variation in malpractice insurance premiums (covered this twice actually), and that malpractice insurance costs don’t alter obstetricians’ practice patterns. The other thing is that the ACA already incentivizes a shift from volume-based payment to value-based payment through things like accountable care organizations, bundled payments, readmissions penalties, and public reporting of quality data. So eliminating our reliance on a fee-for-service system of reimbursement to one more focused on outcomes is likely to reduce unnecessary utlization absent any tort reform. That said, I’m not opposed to tort reform. I think it could be beneficial. I just don’t think it’s going to save the day (in a lowering healthcare cost sense) to the extent that some people think it will. With that, I leave you my favorite prior post on the issue of medical malpractice reform. Enjoy!